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Econ > Unit 1 review > Flashcards

Unit 1 review Flashcards

1
Q

what is the most important indicator an investor should consider when choosing a stock?

A

PE ration, market cap, beta, dividend

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2
Q

The most popular and widely used measure of stock market performance on NY stock?

A

Dow Jones Industrial Average

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3
Q

Define dividend

A

percent of money earned by shareholders

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4
Q

What tends to be the safest type of investment

A

Savings account (or municipal bonds)

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5
Q

Define liquidity

A

money you have access to (cash)

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6
Q

Which component is worth the largest percentage of a person’s credit score?

A

Payment history (35%)

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7
Q

3 ways to strengthen credit score

A

payment history, credit utilization, credit mix

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8
Q

“pay yourself first”

A

put your money in savings first

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9
Q

Should you assume more or less risk the older you get

A

less

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10
Q

explain rule of 72

A

72 divided by interest rate to figure out how many years it will take to double your investment value.

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11
Q

How does U.S. gov intervene in the economy?

A

protect, regulate, produce, consume

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12
Q

why is competition the driving force in a market economy?

A

greater quality equals lower prices for consumers

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13
Q

Importance of individual savings accounts in regards to overall health of economy

A

money is kept safe and you don’t have to rely on banks money

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14
Q

Vertical merger vs horizontal merger

A

horizontal - sell similar products (airlines)
vertical - companies at different stages sell to a different company (Ebay merged with pay pal)

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15
Q

What is a conglomerate

A

4 different businesses in 4 different sectors all under the same corporate (Walt Disney - Pixar, Disney, Lucas film, Marvel)

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16
Q

Strengths & weaknesses of Sole Proprietorship

A

+ = you are boss, get all profits, easy to start
- = unlimited liability, limited life

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17
Q

Strengths & weaknesses of a Corporation

A

+ = limited liability, unlimited life
- = difficult to start, double taxation, government regulation

18
Q

Define Voluntary Exchange

A

2 parties freely trade goods or services and both “win”

19
Q

3 economic questions

A

What to produce?
How to produce?
For whom to produce?

20
Q

4 characteristics of capitalism

A

Economic freedom, Voluntary exchange, Private property, Profit Motives

21
Q

The US has what type of economy?

A

Mixed Market

22
Q

What group decides what is produced in a mixed economy?

A

The people

23
Q

what economic system has the greatest variety of goods and services

A

Market economy

24
Q

what is the main reason producers start businesses

A

Profit motive

25
Q

Market economy

A

Individuals & businesses make decisions

26
Q

Command economy

A

Central authority decides what to produce

27
Q

traditional economy

A

repeat decisions made in earlier times

28
Q

economic goals of america

A

economic freedom, economic efficiency, economic equity, economic security, full employment, price stability, economic growth

29
Q

3 reasons firms merge

A

decrease competition, make more efficient, get rid of negative image

30
Q

“there is no such thing as free lunch”

A

someone always has to pay (production cost)

31
Q

Define Scarcity

A

short supply (all resources = finite)

32
Q

Define opportunity Cost

A

Next best alternate

33
Q

Study of human efforts to satisfy unlimited wants with limited resources is known as..

A

economics

34
Q

4 factors of production

A

land (natural resources), capital (tools), labor (efforts), Entrepreneurs (owner, combines all 3)

35
Q

Circular flow of economy

A

factory market, business, product market, individual/households

36
Q

Production possibilities frontier curve

A

above line - using resources fully with improvements in technology and training

below line - not fully utilizing resources

on line - full utilization

far left/right - more of one product than another

what point is best for beta/alpha - we don’t know, need more info

37
Q

Adam Smith

A

no gov involvement

38
Q

Karl Marx

A

total gov involvement

39
Q

John Keynes

A

some gov involvement

40
Q

Healthy competition results in what kind of prices and quality

A

lower prices, higher quality

41
Q

define credit utilization

A

amount of debt on a credit card

Econ (2 decks)

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